McKinsey on Currency

Yesterday, McKinsey & Co published several excellent articles on currency on their What Matters site. Jeffrey Garten’s piece Toward a Post-Dollar World is particularly insightful. Here, Garten argues that the end of the Dollar’s reign is not a question of if but when and calls for a proactive approach by government, the corporate sector and academia to consider alternatives and make purposeful decisions. The big question for all of us, he argues, is the same as the one posed in New Currency: “what kind of monetary system will best serve the world given deep-seated changes in the balance of economic power, and what process can be followed to develop it?”

“There is a huge research agenda for universities and think tanks,” says Garten. “A world in which the dollar has lost a good deal of its strength will have profound impact on geopolitics, the global economy, and global trade and finance. It will mark the end of the American Empire and usher in something as yet undefined. Little thinking has been done on what all this will mean, and how it is best handled. It’s time that changed.” We couldn’t agree more.

Economic Possibilities for Our Grandchildren

When John Maynard Keynes wrote his essay Economic Possibilities for Our Grandchildren 79 years ago, he was thinking about us. In it, he boldly predicted that we would learn how to create a world over the next 20 years that “solved the economic problem.” Keynes was a remarkable visionary. One of the qualities that exemplified his brilliance was his capability to adjust his thinking as appropriate to the changing life conditions in front of him.

Thus, he was not only a towering figure in 20th Century economic thought, but also able to sufficiently distance himself from his own policies to foresee a world and economy wholly different from his own:

“I see us free, therefore, to return to some of the most sure and certain principles of religion and traditional virture-that avarice is a vice, that the exaction of usury is a misdemeanour, and the love of money is detestable, that those walk most truly in the paths of virtue and sane wisdom who take least thought for the morrow. We shall once more value ends above means and prefer the good to the useful. We shall honour those who can teach us how to pluck the hour and the day virtuously as well, the delightful people who are capable of taking direct enjoyment in things, the lilies of the field who toil not, neither do they spin.”

Robert Skidelsky offers a timely reflection on Keynes’ vision. It’s well worth a read.